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Topic: Inflation Rate Hits 9.78% (Read 1262 times)

New Delhi: Headline inflation inched closer to the double-digit mark in August, rising to 9.78 percent on the back of soaring prices of food and manufactured products, which may prompt the RBI to continue with its monetary tightening policy.

Overall inflation, as measured by the Wholesale Price Index (WPI), stood at 9.22 percent in July. The rate of price rise stood at 8.87 percent in August, 2010.

As per data released by the government Wednesday, the overall inflation figure for June this year has been revised upward to 9.51 percent from the provisional estimate of 9.44 percent.

On an annual basis, food items became 9.62 percent more expensive during the month under review. Onions grew 45.29 percent costlier, while fruit prices were up 22.82 percent and the rates for potatoes rose by 12.53 percent.

In addition, iron and semis grew dearer by over 20 percent, while prices of basic metal alloys rose by 11.56 percent during August, 2011.

Inflation in the fuel and power segment stood at 12.84 percent year-on-year in the month under review, as per the index.

This is the ninth consecutive month when headline inflation has been above the 9 percent-mark.

The jump in inflation to close to double digits is likely to put pressure on the Reserve Bank to continue with its policy of monetary tightening, according to experts.

The apex bank has already hiked key policy rates 11 times since March, 2010, to tame inflation. The bank's next mid-quarterly policy review is scheduled for September 16.

India Inc has said the string of rate hikes, which have raised the cost of borrowing, have acted as a dampener to fresh investment and hindered growth.

Industrial production plunged to a 21-month low of 3.3 percent in July. Meanwhile, economic growth during the April-June period stood at 7.7 per cent, the slowest expansion rate in the past six quarters.

Both the government and the RBI have projected headline inflation to remain elevated till the third half of the current fiscal, mainly on account of pressure from international commodity prices.